Corruption Watch

Government Foundations, a Root of Corruption

VIVAnews – One of the roots of corruption in Indonesia could be the governance of government foundations.

“There is a systemic problem that has not been addressed. The government foundations have basic structural problems that are a source of corruption,” said Karaniya Dharmasaputra, during a limited discussion regarding a study he conducted with Lex Rieffel, at the Freedom Institute, Jakarta, Thursday, Jan. 22.

The study, conducted by a senior researcher of Brookings Institute, Lex Rieffel, and researcher of Freedom Institute, Karaniya Dharmasaputra, reveals that there are three problems with government foundations: lack of transparency and accountability, the creation of opportunity for misuse of state assets, and misallocation of resources. All of which breeds corruption.

In their study, entitled “Governance of Government Foundation: A Test for Indonesian Reformation,” government foundations are defined as those that were established by or are managed by active government officials.

“The purpose [of the study] is to start raising the issue that this (governance of government foundations) is quite a serious problem related to corruption,” said Dharmasaputra.

The research was conducted for a period of one year, from January to December 2007. They detected 50 government foundations affiliated with 22 central governmental departments, ministries and institutions (four of them are no longer active and stated as non-affiliated). Field survey was done from March to June 2007 by conducting structured in-depth interviews with 18 government foundations, analysis of certificates and documents belonging to 26 government foundations, and field observation.

According to Rieffel, this type of government foundations is unique to Indonesia. They are purportedly established to increase the welfare of public servants, who are viewed as having too low a salary. In other words “to make up for inadequacy of basic salary,” said Rieffel.

However, according to the study, “the benefits to the employees are tiny compared to the investment and assets,” said Rieffel. This begs the question of “Why have these foundations if the benefits are small?” he continued.

The study shows that when comparing the investment made to the government foundations with budget’s allocation for the employees’ welfare, the difference is very large. “It’s not a surprise if the welfare of employees is merely a front to serve other interests,” said Dharmasaputra.

The main problem, it seems, lies with the dual function of members of the Board of Directors of such foundations. “There has to be a clear dividing line,” said Dharmasaputra. One of the examples he gave is the still-ongoing scandal of BLBI (Bank Indonesia liquidity assistance case).

The foundation affiliated to the central bank is Indonesian Banking Development Foundation (YPPI). Bank Indonesia’s Deputy Governors also serve as YPPI’s Board of Directors. Rp 31.5 billion (US$2.87 million) was transferred to the Finance and Banking Commission of the House of Representatives YPPI.

According to Dharmasaputra, the fact that active government officials, such as Aulia Pohan, who was a BI Deputy Governor but also sits in YPPI’s Board of Directors, creates a serious conflict of interests. “There has to be a clear dividing line,” he said. “Otherwise there is no checks and balances due to this overlapping authority,” he continued.

“That’s why we believe that government foundations are one of the roots to these corruption problems,” said Dharmasaputra.

From 22 foundations studied, 18 of them are headed by active officials of the affiliated governmental body.

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Rieffel and Dharmasaputra urge the government to create or appoint an independent body. "To study, research, and analyze options for reforming and making recommendations," said Rieffel.

It is hoped that eventually such government-affiliated foundations would no longer exist, at least not in a way that creates conflicts of interests and potential for corruption.

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19 Maret 2024